Transformational Versus Transactional Leadership

Design/methodology/approach – A nation- did, anonymous mail survey was carried out in the United States, requesting community health center executive directors to provide ratings of their medical directors leadership behaviors (34 items) and effectiveness (nine items), using the Multiracial Leadership Questionnaire XX-Short, on a five-point Liker scale. The survey response rate was 40. 9 percent, for a total 269 responses. Exploratory factor analysis was done, using principal factor extraction, followed by prompt rotation).

Findings – The data yielded a three-factor structure, generally aligned with Bass and Viola’s constructs of transformational, transactional ND laissez-fairer leadership. Data do not support the factorial independence of their subspaces (idealized influence, inspirational motivation, individualized consideration, and intellectual stimulation under transformational leadership; contingent reward, management-by-exception active, and management-by- exception passive under transactional leadership).

Two contingent reward items loaded on transformational leadership, and all items of management- by-exception passive loaded on laissez-fairer. Research limitations/implications – A key limitation is that supervisors were surveyed for ratings of the medical erectors’ leadership style. Although past research in other fields has shown that supervisor ratings are strongly correlated with subordinate ratings, further research is needed to validate the findings by surveying physician and other clinical subordinates. Such research will also help to develop appropriate content of leadership training for clinical leaders.

Originality/value – This study represents an important step towards establishing the empirical evidence for the full range of leadership constructs among physician leaders. Keywords Transformational leadership, Transactional leadership, Clinical governance, United States of America Paper type Research paper Leadership among physician executives 599 The Department of Health Services Policy and Management, University of South Carolina, Arnold School of Public Health, provided financial support for data collection expenses and conducting the study. The author gratefully acknowledges the professional contribution and support of Michael E.

Samuels, Drip, Distinguished Scholar in Rural Health Policy and Professor of Family Practice and Community Medicine, University of Kentucky School of Medicine, in planning the study and facilitating the conduct of the survey. The author is also grateful to Thomas F. Curtain, MD, Chief Medical Officer, National Association of Community Health Centers for helpful comments in adapting the survey instrument for the healthcare setting, and Gong-Deck Bake, PhD, Research Assistant, University of South Carolina, Department of Health Services Policy and Management for helpful comments and suggestions to present the factor analysis findings.

Journal of Health Organization and Management Volvo. 22 No. 6, 2008 up. 599-613 q Emerald Group Publishing Limited 1477-7266 DOI 10. 1108/14777260810916579 JOHN 22,6 600 Study purpose and background This paper documents the factor structure of a revue that measured perceived leadership styles and effectiveness of medical directors of the federally-funded community health centers (CHIC) in the United States.

Although transformational and transactional leadership are widely validated in business and industry, the empirical validity of leadership styles among physicians has not been evaluated empirically. The medical profession is characterized by a degree of autonomy and self-regulation that is unlike almost any other professional group (Lagos and Sapling, 1996; Goldsmith, 1993; Heifers, 1995). This study contributes to a theory-driven model of physician leadership development.

Developing effective leadership among physicians in executive or managerial positions (hereafter termed “physician executives”) is essential because of the need for a professional leader in the diffusion of clinical innovations. The physician leader is essential not only for the persuasion role but also to facilitate practicing physicians through the chasm that lies between reading about a scientific discovery and applying it in the practical setting of clinical practice which encompasses many dimensions, so that scientific research actually gets translated into clinical practice (Greer, 1995).

Therefore, developing Hispanic leaders using a reliable, theory-driven leadership model could emerge as a key strategy to accelerate the wide-spread adoption of evidence-based practices for long term cost containment and quality improvement through better care practices and chronic disease management, the two top-priorities in the healthcare agenda. Many factors seriously challenge physician leaders’ ability to use their administrative authority to influence their clinicians to practice evidence-based medicine.

Prominent among these factors are physicians’ professional autonomy, collegial (rather than authority-driven) relationships, and jack of organizational allegiance (Greer, 1995; Kendall, 1994; McCall Jar and Claim, 1992; Goldsmith, 1993; Guthrie, 1999). This is in sharp contrast to other types of businesses, where organizational hierarchy and bottom-line imperatives drive performance accountabilities, as well as the associated executive-subordinate relationships.

Physician executives are pressured by managed care, pay-for- performance, and chronic disease management programs to reduce costs and improve outcomes. But they find their change agenda subject to the vagaries of each colleague’s professional inclinations and personal/clinical preferences. Currently they have little or no understanding about how to bring about a systematic adoption of evidence-based practices.

There is no documented effort on theory-driven leadership development models for clinical leadership among physicians, with predictive validity for clinical outcomes. Lacking an empirically validated model, healthcare organizations either ignore the potential gains to be realized from physician leadership development, or engage in sporadic trainings that use various combinations of strategic and interpersonal leadership concepts developed for business and industry.

While empirical research on ramifications leadership for managerial and supervisory cadres in the public sector health system of the UK has been initiated (Alamo-Metcalf and Albany- Metcalf, 2001) there has been no empirical research on clinical leadership in a theory driven framework. Study setting This paper presents evidence of the validity of a transformational leadership style among physician executives, based on ratings provided by their supervisors on the full range of leadership (Rater) survey (Bass and Viola 1990, 1995).

The questionnaire focuses on interpersonal leadership behaviors, which represent ramifications, transactional, and laissez-fairer leadership. The data are drawn from a mail survey that asked executive directors to rate the leadership behaviors of the medical directors whom they supervise. Community health centers (CHIC) in the United States are publicly funded, non-profit interest entities, providing outpatient care to undeserved rural and minority populations in the inner-cities.

Functioning as the nation’s safety net for the poor and undeserved within the larger market-driven health system, these centers are established by local, community-based entities and funded by the federal overspent through the US Health Resources and Services Administration’s Bureau of Primary Health Care. The Bureau has detailed funding, organizational and accountability guidelines, which ensures a uniform mission (to operate as non-profit entities, predominantly serving undeserved populations), staffing pattern and management structures (US Health Resources and Services Administration, 2006).

Chic also share a common bond through their own membership bodies, the National Association of Community Health Centers, and National Rural Health Association, which serve as idea exchange forums o share organizational experiences, learning, training and other opportunities (National Association of Community Health Centers, 2007; National Rural Health Association, 2007).

In view of these commonalities, community health centers were chosen to evaluate the validity of transformational-transactional leadership theory for clinicians. In this study, Bass and Viola’s model was chosen because their construct of transformational leadership appears to tap into the forces driving physician practice behavior. Many authors have noted the multiple, sometimes conflicting accountabilities that physicians are called upon to fulfill. Shortest et al. 1998) and Weinberg (1996) noted the accountability conflicts faced by physicians in attempting to meet their Hippocratic oath-derived fiduciary obligation (to act in the patient’s best interest), while also being held accountable by payers to maximize the patient population’s group interest, which calls for care optimization rather than care minimization for the individual patient. Donaldson (1998) added a third force driving physicians’ clinical decision-making, market accountability, which demands a “customer” orientation (which may demand elements of care that may conflict with individual and group interest accountabilities).

Overarching all these accountabilities is physicians’ individual self-interest as rational, economic human beings, seeking to maximize their utility (earnings and leisure). Because transformational leadership involves inspirational motivation, to stimulate followers’ own needs for self-actualization and progression through Mascots need hierarchy, it has the potential to enable clinicians to reconcile these conflicting forces, to make decisions that are scientifically tenable, best serve the interests of patients and society, and minimize dysfunctional or selfishly motivated decisions.

Transformational leadership also permits a leadership process to take place despite the nature of association being collegial rather then hierarchical, because of the leader’s focus on using inspirational motivation and intellectual stimulation to drive superior performance, rather than a “command and control” approach. Collegial relating is not abrogated by a leader using the tools of transformational leadership.

Burns (1978) first described the concept of transformational leadership, and Bass and Viola (1990, 1 995) operationally its measurement as part of a full range of Leadership among physician executives 601 02 leadership model, using the Multi-Factor Leadership questionnaire (Form XX). Bass and Viola’s model and instrument have been validated in a large number of for-profit, not-for-profit and government organizations engaged in diverse businesses and services. This paper presents the empirical evidence for the constructs of the ML-XX among physician executives exercising clinical leadership.

An earlier paper, based on the data from the same survey, documented that the medical director’s transformational leadership level, as perceived by their executive directors, predicts the clinic’s achievement of outcomes improvement, which indirectly represents the medical directors’ effectiveness in steering provider practice patterns towards predetermined organizational clinical goals (Grassier et al. , 2005). The current paper examines the extent to which the Mil’s empirical factor structure among physician leaders corresponds to the factor structure demonstrated in other populations.

The full range of leadership model Bass and Viola’s ML – Short has 45 questions. Of these, 36 items ask the respondent to rate the leaders behaviors, which are aggregated to derive the leader’s scores of transformational, transactional and kisses-fairer leadership styles. The respondent could be a subordinate, superior or peer. Within transformational leadership, Bass and Viola documented five subspaces, (often referred to as the five Xi’s), idealized influence-behavior, idealized influence-attributed, inspirational motivation, intellectual stimulation, and individualized consideration.

Within transactional leadership, three subspaces are documented, contingent reward, management-by-exception – active, and management-by-exception – passive. Laissez-fairer is documented as a single scale. Taken as a whole, Viola et al. (1995) demonstrated the actuarial independence of nine sub-scales measured by 36 items, among a pooled sample that aggregated survey respondents from diverse organizations, government, for-profit and not-for-profit organizations.

The items span the full range of leadership, transformational, transactional and laissez-fairer leadership, respectively documented to be highly effective, moderately effective, and ineffective, in a wide range of business, government, non-profit, and research organizations (Howell and Viola, 1993; Keller, 1993; Betting et al. , 1992; Kiosk, 1997). The remaining nine items of the survey measure subjective assessments of he leaders effectiveness, subordinate satisfaction, and subordinate extra effort, each calculated as the mean of three item scores.

Bass and Viola (1995) found evidence for the above constructs using confirmatory factor analysis on a sample of 1 ,394 respondents from diverse settings including government organizations, educational settings, and private organizations in the United States and Scotland. According to Bass and Viola (1990, 1995) transformational leadership includes behaviors that are thought to activate followers’ higher motivations, and lead them to act upon these motivations for exceptional performance and ethically- inspired goals, transcending self-interest.

Transactional leadership is an influence process to exchange valued rewards for performance. Laissez-fairer leadership refers to indifferent (or lack of) leadership. Within transformational leadership, the sub-scale idealized influence includes behaviors and attributions that result in follower admiration, respect, and trust. The measurement items include behavior items that feed into the subspace, idealized influence-behavior, and attribution items that constitute the subspace, idealized influence-attributed.

The items ask for the rater’s perceptions about the leader’s veer-arching vision and mission, putting follower needs over personal needs, instilling pride, gaining trust and respect, increasing optimism, and manifesting concern for ethical and moral values in decision-making. Inspirational motivation involves communicating the vision to followers, fostering follower identification with the vision, focusing follower efforts, arousing their self-awareness of higher goals and motivations, and sustaining positive emotional arousal and identification with these goals.

Intellectual stimulation involves providing followers with a flow of challenging ideas that stimulate rethinking old ways of owing things. Leaders who stimulate followers intellectually arouse awareness of problems, and of followers’ own thoughts and responses, creating a cognitive- emotional milieu for them to explore and experiment with increasingly challenging goals (Burns, 1978). Intellectual stimulation may be particularly relevant for physician executives, challenged as they are, to influence their cognitively autonomous followers’ clinical decision-making towards consensual, value-driven goals.

Individualized consideration includes mentoring, coaching, continuous feedback, and linking the individual’s current needs to the organization’s mission (Bass, 1990). Transactional leadership, according to Bass and Viola (1995) has three sub-constructs, contingent reward and management- by-exception, active and passive. Contingent reward covers behaviors intended to clarify performance expectations, and to establish follower credibility that valued rewards (verbal or tangible) will follow in exchange for good performance.

Management-by-exception – passive includes watching for deviations from the expected performance norms and standards, and providing feedback to correct deviations from the norm. Management by exception – active spans behaviors intended to proactively prevent potential problems before they arise. Laissez- fairer is non-leadership, behaviors that imply the leader’s indifference towards both follower actions and organizational outcomes, as well as demonstrating an attitude of abdicating responsibility (to make decisions, or address important issues).

Few studies apart from Bass and Viola (1995) have supported the independence of the nine subspaces. A number of studies have supported the factorial independence of the three major scales, transformational, transactional and laissez-fairer leadership (Tracey and Honking, 1998; Careless, 1998; Den Warthog t al. , 1997). Objective and methods The study objective was to examine the factor structure and validity of Bass’s full range of leadership constructs among physician executives.

Survey responses of 269 executive directors (response rate 40. 9 percent) of the federally-supported Chic were used. Respondents judged how frequently each statement (perceptions of leadership style and effectiveness) fit their medical director on a five-point Liker scale, 0 1/4 Not at all, to 4 1/4 Frequently, if not always. Bass’s 45-item survey (summarized in Table l) was adapted to a 43-item survey (Table l), based on comments provided by South

Carolina’s CHIC executive directors who reviewed the draft survey, and comments provided by national technical assistance experts (including two trained as physicians) at the National Association of Community Health Centers. Two items from the original ML were deleted as follows: “Fails to interfere until problems become serious,” and “Concentrates his/her full Leadership among physician executives 603 I. Transformational leadership items classified by Bass and Viola’s five sub- scales (sub-scales not validated by our data) Idealized influence – attributed (Il-

A) Proud of him/her (Q) Goes beyond self-interest (IQ 7) Has my respect (QUO) Displays power and confidence (QUO) Idealized influence- behavior (II-B) Talks of values (Q) Sense of purpose (QUO) Considers the moral/ethical (QUO ) Emphasizes the collective mission (QUO) Inspirational motivation (IM) Talks optimistically (Q) Talks enthusiastically (IQ 2) Clear vision (QUO) Expresses confidence (QUO) Intellectual stimulation (IS) Seeking different views (IQ ) Reexamines assumptions (Q) Suggests new ways (QUO) Suggests different angles (QUO) Individualized consideration (ICC) Teaches and coaches (QUO) Individualizes attention (QUO)

Differentiates among us (QUO) Helping subordinates develop their strengths (QUO) II. Transactional leadership scale items (validated by the study) as classified under Bass and Viola’s subspaces Contingent reward (CAR) Assists based on effort (Q)a Responsible for achievement (IQ O) Clarifies rewards (IQ 5)a Recognize achievement (QUO)a Management by exception – active (EMBER-A) Concentrates on failures (Q) Tracks your mistakes (QUO) Focuses on your mistakes (QUO) Ill.

Laissez-fairer style items, classified by Bass and Viola’s sub-scales (sub-scales not validated by our data) Management by exception-passive (EMBER-P) Reacts o problems, if chronic (IQ 9) (originally assigned to TRY by Bass)b If not broke, don’t fix (QUO) Puts out fires (IQ 1) Laissez-fairer (the original ELF grouping in b Avoids involvement (Q) Bass’s model) Unavailable when needed (Q) Avoids deciding (QUO) Delays responding (QUO) Notes: l. Transformational leadership: 20 items; II. Transactional leadership: seven items; Ill. Laissez-fairer leadership: seven items.

An adapted ML-Form XX Short (Copyright 1996, 2003 by Bernard M. Bass and Bruce J. Viola. All rights reserved. Published by Mind Garden, Inc. , h. N. MN. N. Ingrained. Com) was used. The original 45-item survey was reduced to a 43-item survey. Item summaries above were permitted by the copyright holder, Mind Garden Inc. ); a Three items representing contingent reward were assigned to transactional leadership based on theoretical ground although they loaded on transformational leadership in this study; b Bass’s sub-constructs of transactional and laissez-fairer leadership are reassigned, based on factor analysis results.

Bass’s model assigns management-by-exception-passive under transactional leadership. In this sample, these loaded with Bass’s original laissez- fairer items, in the three factor model. Therefore the items of management by exception passive are shown under laissez-fairer leadership. Bass and Viola’s sub-scales indicated under each leadership style were not validated in the study sample. Only three factors, transformational, transactional and laissez-fairer leadership were validated. Table l.

Leadership items distributed by the three factors extracted by factor analysis attention on dealing with mistakes, complaints and failures. ” These items were deleted because several executive directors of South Carolina’s Chic and the national experts felt the items were too harsh and negatively worded, which loud risk a backlash from the medical director community. A few other items were re-worded to tone down negative language, and one item was reworded to adapt it for healthcare.

Of the 43 items included in the survey, 34 were leader behavior/attribution items and nine were leader effectiveness items. The 34 leadership item responses were subjected to exploratory (common) factor analysis, principal factor method to extract the factors, followed by oblique (prompt) rotation. Oblique rotation was judged appropriate because of significant correlations documented between the constructs (Viola et al. , 1995). In the first step, a nine-factor model was specified, in line with the documented factor structure of the instrument in other populations.

Based on the results, the number of factors was progressively reduced, until a clear, approximately simple structure, with conceptually interpretable constructs was achieved. Results The scale reliability statistics for the originally documented subspaces of this instrument were calculated and are presented in Table II. The table shows that for all the leadership style and effectiveness scales, except management- by-exception, active and passive, Cockroach’s alpha values are . . 70, the critical level suggested by Annually (1967) for scale reliability. For management-by- exception, active and passive alpha values were 0. 8 and 0. 69 respectively. To verify evidence for Bass and Viola’s nine leadership sub-scales, a nine-factor model was first tested. The resulting item loadings in the rotated factor pattern, and factor structure matrices are presented in Table Ill, showing that all items but three showed significant factor loadings, (. 0. 40) on only one factor. One item of contingent reward (Q) and one individualized consideration (Q 14) showed suboptimal factor loadings (, 0. 0 in the factor pattern matrix), but none showed equivocal loadings on an additional factor.